Chapter 4

Both Questions 6&7

"The key to thinking like an economist is recognizing the trade-offs inherent to fiddling with markets. Regulation can disrupt the movement of capital and labor, raise the cost of goods and services, inhibit innovation, and otherwise shackle the economy" (p. 90).

I think this passage summed up the chapter nicely. I have never thought of government involvement in markets as a good thing. There is a never ending stream of complaints about the governments involvement in certain instances, and even more so recently because of the new plans for healthcare. What is interesting about these complaints is that they don't only come from normal individuals, but also from politicians themselves, often forming political campaigns around governments over involvement or lack of involvement in certain areas. At the same time, people complain about the lack of government involvement as well. You go literally anywhere on the Internet and somebody has got something to say about how the government is regulating certain things. With all this complaining, I always assumed that government involvement was just not a good thing. Period. But having read this chapter, and covering the material in class, I can see that regulation by the government is, in fact both beneficial and necessary.
 Wheelan used the example of the DMV. If there were privately owned companies that replaced the DMV, that could be dangerous for anyone driving. This is because private companies would, in order to grow their number of consumers, hand out a drivers license to unqualified drivers. There would be complete maniacs on the road (or at least more).
The struggle is for the government to find a balance. Too much regulation will make it so there are no incentives for good production and customer service. Too little regulation will cause a shortage in striped bass.